Vodafone Australia and Visa will next year launch Vodafone SmartPass for smartphones with near-field communication (NFC) enabled, to allow contactless payments at stores with PayWave payment systems.

Vodafone SmartPass (Credit: Vodafone)

Customers who want to get the new app will need a special NFC SIM from Vodafone with the secure element, which contains the prepaid account information that is used for the transaction. Any smartphone with NFC enabled will be able to communicate with this SIM; however, the company today demonstrated the SmartPass app using a Samsung Galaxy S III.

The prepaid account is provided by ANZ, and is initially blank, with no customer details entered. When a customer signs up for a prepaid account, they can enter a set of existing account details that they want to use to top up their prepaid account from, with the app allowing anywhere between AU$20 and AU$200 to be topped up at a time. The app can also use the NFC chip to scan in new card details from cards with NFC chips.

Once the card is loaded with credit, the user just presses the tap button in the app when they are near a payment terminal in order to transfer the money.

Payments of under AU$100 do not need to have a PIN entered or a signature verified, and Visa's country manager for Australia Vipin Kalra said that a zero-liability policy applies, so that any fraudulent transactions that occur as a result of the app are not charged to the account holder as long as it is reported. Once a user has set up an account, they will be given a link to a portal where they can cancel their accounts and dispute transactions in the event that the phone is stolen.

The payments and transaction history is handled by third-party payments company Rev, ensuring that the transaction history is not stored on the phone itself.

Vodafone's general manager of strategy and business development Thomas Roets said that the company intends to have 80 percent of smartphones sold in 2013 be NFC capable.

"Enhancements in smartphone technology will not only deliver us with a smarter way to shop, but will also make life a whole lot easier, saving us time and possibly even money," he said. "We expect to see NFC smartphones eventually replacing all the cards we carry in our wallets, whether for payment, travel, loyalty, ID, or gift vouchers, enabling access at a whim."

The figure of 80 percent suggests that Vodafone is not banking on the iPhone 5 being a major seller for the company in the next 12 months, as Apple has not included NFC technology in its latest release. The Commonwealth Bank sought to address Apple's reluctance to include NFC technology in the iPhone through the iCarte NFC case for Kaching; however, the current case is not compatible with the iPhone 5, due to the change from the 30-pin dock connector to the Lightning connector.

The announcement comes after Vodafone's parent company Vodafone Group formed a partnership with Visa in February.

Westpac has also gone down the path of putting NFC chips on SIM cards, but has partnered with MasterCard for its trial. When asked today whether Visa is working with other companies aside from Vodafone, the company declined to comment.